Park City Group Reports Fourth Quarter and Full Year Results
Record Annual Subscription Revenue, FY11 Free Cash Flow Increased 38%
· Quarterly Subscription Revenue of $1.7 Million, a 12% Increase Year Over Year
· Annual Subscription Revenue of $6.5 Million, a 10% Increase Year Over Year
· 4Q11 Revenue of $3.0 Million, a 9% Increase Year Over Year
· FY11 Revenue of $10.8 Million, a 1% Decrease Year Over Year
· 4Q11 Adjusted EBITDA of $705,000, a 17% Increase Year Over Year
· FY11 Adjusted EBITDA of $2.3 Million, an 11% Increase Year Over Year
· Retailer (“Hub”) Customer Count Increased to 32, Versus 23 at the Same Time a Year Ago
PARK CITY, Utah – September 13, 2011 -- Park City Group (NYSE Amex: PCYG), a Software-as-a-Service (SaaS) provider of unique supply chain solutions for retailers and their suppliers, today announced results for its fiscal fourth quarter and full fiscal year ended June 30, 2011.
“During the past year, we built a scalable infrastructure capable of handling a rapid pace of growth, moderated only by our disciplined approach to consistently deliver an outstanding customer experience. At the same time, we continued to add new retail hubs and the pace of supplier connections accelerated three fold during our fourth quarter. In total for fiscal 2011, we added 9 retail hubs, one of which is a trade association, and 119 contracted connections, which was a record. Our execution was flawless and I’m very proud of the job our team has done,” said Randall K. Fields, Park City Group’s Chairman and CEO.
Revenue
Total revenue for the fourth quarter ended June 30, 2011 was $3.0 million, a 9% increase from the prior year. Subscription revenue during the fourth quarter increased 12% to $1.7 million, reflecting growth of retail and supplier customers contracted earlier in the year. Professional services and other revenue during the fourth quarter increased 101% to $491,000, which was due to accelerated connection activity and revenue related to a new trade association hub. Fourth quarter license and maintenance revenue declined 37% and 10% respectively, reflecting the Company’s strategic shift to a subscription revenue model.
For the fiscal year ended June 30, 2011, total revenue was $10.8 million, a $122,000, or 1%, decrease from the prior year. Excluding a one-time $490,000 patent license sale from the comparison with the prior year, total fiscal 2011 revenue increased 4%. In addition, revenue continued to be affected by the Company’s shift to a subscription based model. License and maintenance revenue during fiscal 2011 declined 31% and 12%, respectively, which was only partially offset by a 10% increase in subscription revenue.
Net (Loss) Income
Net loss available to common shareholders for the quarter ended June 30, 2011 improved to ($49,000), or ($0.00) per share, as compared to a net loss of ($127,000), or ($0.01) per share, during the prior year period. Non-GAAP EPS for the fourth quarter were $0.03 versus $0.02 during the same period last year.
For the fiscal year ended June 30, 2011, the net loss available to common shareholders was $1.0 million, or ($0.09) per share, compared to a net loss of $149,000, or ($0.01) per share, during the same period in fiscal 2010. Non-GAAP EPS for fiscal 2011 were $0.07 versus $0.05 during the same period last year.
Cash
During the quarter ended June 30, 2011, free cash flow was $524,000, compared to $681,000 during the same period last year. For fiscal 2011, free cash flow increased 38% to $1,194,000 versus $867,000 reported during fiscal 2010. Total Cash at the end of the fiscal 2011 was $2.6 million, and net debt declined by 28% to $2.3 million at June 30, 2011.
“As previously announced, we signed connection agreements with 5 of the 10 largest consumer food suppliers in the world during the fourth quarter. While the contribution from these suppliers will be relatively small at first, the opportunity to grow these relationships is very exciting. As we see the contribution from these and the 60 other suppliers contracted during the fourth quarter, our subscription revenue growth rate should continue to accelerate over the next several quarters,” said Mr. Fields.
The Company will host a conference call at 4:30 P.M. Eastern to discuss today’s results. Investors and interested parties may participate in the call by dialing (877) 675-3568 and referring to Conference ID: 88557781. The conference call is also being webcast and is available via the investor relations section of the Company’s website, www.parkcitygroup.com. A toll free replay of the conference call will be available until September 19, 2011 by dialing (855) 859-2056 and entering conference ID: 88557781.
About Park City Group
Park City Group (NYSE Amex: PCYG) is a Software-as-a-Service (“SaaS”) provider that brings unique visibility to the consumer goods supply chain. With over $100 million invested in development and 16 years of commercialization surrounding its proprietary scan based data platform, the Company’s services increase customers’ sales and profitability, while ensuring regulatory compliance for both retailers and their suppliers.
Through a process known as Consumer Driven Sales OptimizationTM, Park City Group helps retail and consumer packaged goods customers turn transactional information into actionable strategies to lower inventory, increase sales and improve efficiencies in the supply chain.
The Company’s Food Safety Global RegistryTM provides food retailers and suppliers with a robust solution that will help them protect their brands and remain in compliance with rapidly evolving regulations in the recently-passed Food Safety Modernization Act. The Food Safety Global Registry, an internet-based technology, will enable all participants in the farm-to-table supply chain to easily manage tracking and traceability requirements as products move between trading partners. For more information, go to www.parkcitygroup.com.
Non-GAAP Financial Measures
This press release includes the following financial measures defined as “non-GAAP financial measures” by the Securities and Exchange Commission: non-GAAP EBITDA, non-GAAP earnings per share, net debt and free cash flow. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. Reconciliations of these non-GAAP financial measures to the nearest comparable GAAP measures will be provided upon the completion of the Company’s annual audit.
Non-GAAP EBITDA excludes items such as impairment charges, allowance for doubtful accounts, charges to consolidate and integrate recently acquired businesses, costs of closing corporate facilities, non-cash stock based compensation and other one-time cash and non-cash charges. Non-GAAP EPS excludes items such as non-cash stock based compensation, charges to consolidate and integrate recently acquired businesses, costs for closing corporate facilities, amortization of acquired intangible assets and other one-time cash and non-cash charges. Net debt is the total debt balance less the cash balance. Free cash flow includes net cash provided (used) by operating activities less replacement purchases of property and equipment. The Company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses or net purchases of property and equipment, as the case may be, which may not be indicative of its core operation results and business outlook. In addition, because Park City Group has historically reported certain non-GAAP results to investors, the Company believes that the inclusion of non-GAAP measures provides consistency in the Company’s financial reporting.
Forward-Looking Statement
Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “if”, “should” and “will” and similar expressions as they relate to Park City Group, Inc. (”Park City Group”) are intended to identify such forward-looking statements. Park City Group may from time to time update these publicly announced projections, but it is not obligated to do so. Any projections of future results of operations should not be construed in any manner as a guarantee that such results will in fact occur. These projections are subject to change and could differ materially from final reported results. For a discussion of such risks and uncertainties, see “Risk Factors” in Park City’s annual report on Form 10-K, its quarterly report on Form 10-Q, and its other reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.
Investor Relations Contact:
Dave Mossberg
Three Part Advisors, LLC
817-310-0051
-- tables to follow –
PARK CITY GROUP, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
| | | Three Months Ended June 30 | | Fiscal Year Ended June 30 |
| | 2011 | | 2010 | | 2011 | | 2010 |
| Revenues: | | | | | | | |
| Subscription | $1,703,664 | | $1,515,607 | | $6,548,578 | | $5,938,318 |
| Maintenance | 524,624 | | 584,818 | | 2,198,977 | | 2,501,511 |
| Professional services and other revenue | 490,569 | | 244,480 | | 1,223,028 | | 1,306,961 |
| Software licenses | 233,570 | | 372,960 | | 781,549 | | 1,127,770 |
| | | | | | | | | |
| | Total revenues | 2,952,427 | | 2,717,865 | | 10,752,132 | | 10,874,560 |
| | | | | | | | | |
| Operating revenues: | | | | | | | |
| Cost of services and product support | 1,133,592 | | 975,015 | | 4,028,222 | | 3,887,051 |
| Sales and marketing | 693,722 | | 680,110 | | 2,742,061 | | 2,557,515 |
| General and administrative | 672,922 | | 735,209 | | 3,053,818 | | 2,776,401 |
| Depreciation and amortization | 211,179 | | 194,588 | | 786,790 | | 811,900 |
| | | | | | | | | |
| | Total operating expenses | 2,711,415 | | 2,584,922 | | 10,610,891 | | 10,032,867 |
| | | | | | | | | |
| (Loss) Income from operations | 241,012 | | 132,943 | | 141,241 | | 841,693 |
| | | | | | | | | |
| Other income (expense): | | | | | | | |
| Gain on refinance of note payable | - | | - | | - | | 43,811 |
| Other gains | - | | - | | - | | 24,185 |
| Interest expense | (82,884) | | (179,537) | | (346,704) | | (732,698) |
| | | | | | | | | |
| (Loss) income before income taxes | 158,128 | | (46,594) | | (205,463) | | 176,991 |
| | | | | | | | | |
| (Provision) benefit for income taxes | - | | - | | - | | - |
| | | | | | | | | |
| | Net (loss) income | 158,128 | | (46,594) | | (205,463) | | 176,991 |
| | | | | | | | | |
| | Dividends on preferred stock | (206,928) | | (80,701) | | (826,411) | | (326,385) |
| | | | | | | | | |
| | Net (loss) income applicable to common shareholders | $ (48,800) | | $ (127,295) | | $(1,031,874) | | $ (149,394) |
| | | | | | | | | |
| Weighted average shares, basic and diluted | 11,438,000 | | 10,850,000 | | 11,212,000 | | 10,716,000 |
| Basic and diluted loss per share | $ (0.00) | | $ (0.01) | | $ (0.09) | | $ (0.01) |
PARK CITY GROUP, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheet
| | | | | |
| | June 30, 2011 | | June 30, 2010 |
| Assets | | | |
| | | | | |
| | Current assets: | | | |
| | Cash and cash equivalents | $ 2,618,229 | | $ 1,157,431 |
| | Receivables, net of allowance of $15,581 and $72,000 | | | |
| | at June 30, 2011 and 2010, respectively | 2,041,786 | | 1,031,020 |
| | Unbilled receivables | 17,987 | | 417,926 |
| | Prepaid expenses and other current assets | 265,818 | | 181,434 |
| | | | | |
| | Total current assets | 4,943,820 | | 2,787,811 |
| | | | | |
| | Property and equipment, net | 651,992 | | 544,576 |
| | | | | |
| | Other assets: | | | |
| | Deposits and other assets | 24,026 | | 23,287 |
| | Customer relationships | 3,184,967 | | 3,607,283 |
| | Goodwill | 4,805,933 | | 4,805,933 |
| | Capitalized software costs, net | 365,413 | | 281,686 |
| | | | | |
| | Total other assets | 8,380,339 | | 8,718,189 |
| | | | | |
| | Total assets | $ 13,976,151 | | $ 12,050,576 |
| | | | | |
| Liabilities and Stockholders’ Equity | | | |
| | | | | |
| | Current liabilities: | | | |
| | Accounts payable | $ 790,914 | | $ 574,847 |
| | Accrued liabilities | 1,162,775 | | 1,286,218 |
| | Deferred revenue | 1,663,232 | | 1,364,390 |
| | Capital lease obligations | 107,547 | | 132,184 |
| | Lines of credit | 1,200,000 | | 600,000 |
| | Note payable | 2,414,853 | | 766,705 |
| | | | | |
| | Total current liabilities | 7,339,321 | | 4,724,344 |
| | | | | |
| | Long-term liabilities: | | | |
| | Notes payable, less current portion | 1,271,691 | | 2,920,602 |
| | Capital lease obligations, less current portion | 41,202 | | 148,749 |
| | | | | |
| | Total liabilities | 8,652,214 | | 7,793,695 |
PARK CITY GROUP, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheet
| | | | | |
| | June 30, 2011 | | June 30, 2010 |
| | | | | |
| | Stockholders’ equity: | | | |
| | Series A Convertible Preferred stock, $0.01 par value, 30,000,000 shares | | | |
| | authorized; 667,955 and 648,396 shares issued and outstanding at June 30, 2011 | | | |
| | and 2010, respectively | 6,680 | | 6,484 |
| | Series B Convertible Preferred stock, $0.01 par value, 30,000,000 shares | | | |
| | authorized; 411,927 and zero shares issued and outstanding at June 30, 2011 and | | | |
| | 2010, respectively | 4,119 | | - |
| | Common stock, $0.01 par value, 50,000,000 shares authorized; 11,612,460 and | | | |
| | 10,884,364 issued and outstanding at June 30, 2011 and June 30, 2010, | | | |
| | respectively | 116,125 | | 108,844 |
| | Additional paid-in capital | 36,088,584 | | 29,881,977 |
| | Subscription payable for Series B Convertible Preferred Stock | - | | 4,119,273 |
| | Accumulated deficit | (30,891,571) | | (29,859,697) |
| | | | | |
| | Total stockholders’ equity | 5,323,937 | | 4,256,881 |
| | | | | |
| | Total liabilities and stockholders’ equity | $ 13,976,151 | | $ 12,050,576 |
PARK CITY GROUP, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
| | Fiscal Year Ended June 30, |
| | 2011 | | 2010 |
| Cash Flows From Operating Activities: | | | |
| | Net income (loss) | $ (205,463) | | $ 176,991 |
| | Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | |
| | Depreciation and amortization | 786,790 | | 811,900 |
| | Bad debt expense | 57,096 | | 215,612 |
| | Stock compensation expense | 862,876 | | 386,773 |
| | Stock issued for litigation settlement | 375,000 | | - |
| | Amortization of discounts on debt | - | | 1,589 |
| | Gain on refinance of debt & other gains | - | | (67,996) |
| Decrease (increase) in: | | | |
| | Trade receivables | (1,067,862) | | (43,414) |
| | Unbilled receivables | 399,939 | | (296,973) |
| | Prepaids and other assets | (85,123) | | 25,386 |
| (Decrease) increase in: | | | |
| | Accounts payable | 216,067 | | (184,783) |
| | Accrued liabilities | (191,376) | | (19,672) |
| | Deferred revenue | 298,842 | | (58,107) |
| | | | | |
| | Net cash provided by operating activities | 1,446,786 | | 947,306 |
| | | | | |
| Cash Flows From Investing Activities: | | | |
| | Purchase of property and equipment | (358,566) | | (79,901) |
| | Capitalization of software costs | (197,051) | | - |
| | | | | |
| | Net cash used in investing activities | (555,617) | | (79,901) |
| | | | | |
| Cash Flows From Financing Activities: | | | |
| | Net increase in lines of credit | 600,000 | | 400,000 |
| | Proceeds from issuance of stock | 140,800 | | - |
| | Proceeds from exercise of warrants | 332,510 | | - |
| | Proceeds from issuance of note payable | 559,472 | | - |
| | Dividends paid | (370,734) | | - |
| | Payments on notes payable and capital leases | (692,419) | | (766,253) |
| | | | | |
| | Net cash (used in) provided by financing activities | 569,629 | | (366,253) |
| | | | | |
| Net increase in cash | 1,460,798 | | 501,152 |
| | | | | |
| Cash and cash equivalents at beginning of period | 1,157,431 | | 656,279 |
| | | | | |
| Cash and cash equivalents at end of period | $ 2,618,229 | | $ 1,157,431 |
PARK CITY GROUP, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
| Supplemental Disclosure of Cash Flow Information | | | |
| | Conversion of debt to subscription payable for Series B Preferred | $ - | | $ - |
| | Conversion of line of credit to subscription payable for Series B Preferred | $ 302,238 | | $ 823,861 |
| | | | |
| | | | |
| Supplemental Disclosure of Non-Cash Investing and Financing Activities | | | |
| | Conversion of debt to subscription payable for Series B Preferred | $ - | | $ 1,243,572 |
| | Conversion of line of credit to subscription payable for Series B Preferred | $ - | | $ 2,875,701 |
| | Common Stock to pay accrued liabilities | $ 923,890 | | $ 386,773 |
| | Dividends accrued on preferred stock | $ 826,411 | | $ 326,385 |
| | Dividends paid with preferred stock | $ 326,730 | | $ 402,301 |
| | Property and equipment purchased by capital lease | $ - | | $ 184,929 |
PARK CITY GROUP, INC. AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
Adjusted EBITDA
(In $000’s)
Audited results of operations
| | Three Months Ended June 30 | | Fiscal Year Ended June 30 |
| | 2011 | | 2010 | | 2011 | | 2010 |
| | | | | | | | |
| Net Income (loss) | $158 | | ($47) | | ($205) | | $177 |
| | | | | | | | |
| Adjusted EBITDA Reconciliation Adjustments: | | | | | | |
| Depreciation and amortization | 211 | | 194 | | 787 | | 812 |
| Bad debt expense | 43 | | 43 | | 57 | | 215 |
| Interest, net | 83 | | 180 | | 347 | | 733 |
| Stock based compensation | 210 | | 168 | | 863 | | 537 |
| One-time expenses (stock and cash) | - | | - | | 450 | | (68) |
| One-time patent revenue | - | | - | | - | | (490) |
| Acquisition related costs (1) | - | | 65 | | - | | 150 |
| | | | | | | | |
| Adjusted EBITDA | $705 | | $603 | | $2,299 | | $2,066 |
| | | | | | | | |
1. Acquisition related costs are certain costs that were incurred during the period that were not capitalized, including leases on vacant corporate facilities and data centers, travel, training and "run-out" of certain unused equipment leases and maintenance agreements. |
PARK CITY GROUP, INC. AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
Non-GAAP Net Income (Loss) to Common Shareholders and EPS
(In $000’s, except per share)
Audited results of operations
| | Three Months Ended June 30 | | Fiscal Year Ended June 30 |
| | 2011 | | 2010 | | 2011 | | 2010 |
| | | | | | | | |
| Net Income (loss) | $158 | | ($47) | | ($205) | | $177 |
| | | | | | | | |
| Non-GAAP Net Income (Loss) Reconciliation Adjustments: | | | | | | |
| Stock based compensation | 210 | | 168 | | 863 | | 537 |
| One-time expenses (stock and cash) | - | | - | | 450 | | - |
| One-time patent revenue | - | | - | | - | | (490) |
| Acquisition related costs (1) | - | | 65 | | - | | 150 |
| Acquisition related amortization (1) | 126 | | 126 | | 504 | | 504 |
| | | | | | | | |
| Non-GAAP Net Income | $494 | | $312 | | $1,612 | | $878 |
| | | | | | | | |
| Preferred dividends | (207) | | (81) | | (826) | | (326) |
| | | | | | | | |
| Non-GAAP Net Income to Common Shareholders | $287 | | $231 | | $786 | | $552 |
| | | | | | | | |
| Weighted average shares, diluted | 11,438,000 | | 10,850,000 | | 11,212,000 | | 10,716,000 |
| Non-GAAP EPS, diluted | $0.03 | | $0.02 | | $0.07 | | $0.05 |
| |
1. Acquisition related costs are certain costs that were incurred during the period that were not capitalized, including leases on vacant corporate facilities and data centers, travel, training and "run-out" of certain unused equipment leases and maintenance agreements. |
PARK CITY GROUP, INC. AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
Non-GAAP Free Cash Flow
(In $000’s)
Audited results of operations
| | Three Months Ended June 30 | | Fiscal Year Ended June 30 |
| | 2011 | | 2010 | | 2011 | | 2010 |
| | | | | | | | |
| Net Cash Provided by Operating Activities | $536 | | $696 | | $1,447 | | $947 |
| | | | | | | | |
| Non-GAAP Free Cash Flow Reconciliation Adjustments: | | | | | | |
| Purchase of property and equipment | (12) | | (15) | | (56) | | (80) |
| Capitalized software costs | - | | - | | (197) | | - |
| | | | | | | | |
| Non-GAAP Free Cash Flow | $524 | | $681 | | $1,194 | | $867 |
| | | | | | | | |
Free cash flow includes net cash provided (used) by operating activities less replacement purchases of property and equipment. Capital expenditures related to long-term investments and new technology developments are omitted. During 4Q11 the Company invested $303,000 in new technology development, which is excluded from the 4Q11 Free Cash Flow calculation.
Non-GAAP Net Debt
(In $000’s)
Audited results of operations
| | | Fiscal Year Ended |
| | | June 30 |
| | | 2011 | | 2010 |
| | | | | |
| Total Debt | | $4,887 | | $4,287 |
| | | | | |
| Less Total Cash | | $2,618 | | $1,157 |
| | | | | |
| Non-GAAP Net Debt | | $2,269 | | $3,130 |
| | | | | |
